Daily Management Review

Wal-Mart to invest in Indian online retailer Flipkart


09/29/2016


The world's largest retailer Wal-Mart Stores is negotiating with Flipkart, the largest Internet company in India, according to a source familiar with the situation. If the parties agree on cooperation, Wal-Mart will be able to strengthen its position in the market of Asia's third-largest economy.



Walmart
Walmart
Wal-Mart spokesman in India declined to comment on the possible deal; so did a representative of Flipkart.

Wal-Mart’s future investment in Flipkart reflects latest developments of online strategy of the world's largest retailer. Now, the company is trying to restore growth of online sales and improve competitiveness in relation to its rival, Amazon. In September, Wal-Mart has completed takeover of American online retailer Jet.com Inc. for $ 3.3 billion. Earlier, in June, the company has sold its Chinese Internet business to local JD.com in exchange for a 5% stake in it.

Online sales of Wal-Mart reached nearly $ 14 billion, or 3% of its total turnover of $ 482 billion over the past year. However, quarterly growth of the retailer's Internet sales has slowed down in the last few years. Amazon's revenue totaled $ 107 billion in 2015, and its growth is ahead of Wal-Mart performance.

Analysts believe that investing in the Indian Flipkart may help Wal-Mart pave a way for development in a country that has been a daunting task for the American company until now.

In 2013, after years of lobbying and attempts to reach 1.2 billion Indian consumers, Wal-Mart has postponed plans for active construction of supermarkets in the country. The retailer explained it by too strict regulation of the market. Indian law demands from foreign trade companies that local products account for not less than one third of the turnover of shops in the country. Now, Wal-Mart has 21 wholesale center in India, yet none of them has the right to sell products directly to consumers.

In case of the transaction, Flipkart will receive money and a strong partner in the fight against Amazon. The latter, along with Uber Technologies Inc. and other start-ups, turned close attention to the Indian market amid slowing Chinese economy. According to Morgan Stanley’s forecast, the e-commerce market in India will reach $ 100 billion by 2020, compared to $ 3 billion more in 2013

In recent years, Flipkart and some other Indian start-ups have had some difficulties to raise funds from investors. Indian online merchants have lost millions of dollars on large discounts on various products - from smartphones to shoes, and analysts expect the market shake-up.

Some investors evaluated Flipkart price of $ 9 billion in 2016, says a banker familiar with business of the company. It can be compared to $ 15 billion in 2015, when the Indian startup has received funding from the shareholders.

A few months ago, Flipkart discussed possible investments in JD.com, but the negotiations did not lead to a transaction, says the source. 

source: wsj.com






Science & Technology

Chinese Study Claims Heart Diseases Can Be Reduced By Having An Egg A Day

Asteroid mining: Reality or fiction?

3D Printing Used For Life Saving Kidney Transplant In Two Year Old At U.K. NHS

California to require solar panels for new homes by 2020

Blockchain Enables De Beers To Track Diamond From The Miner To The Retailer

Microsoft releases Windows 10’s April 2018 Update

DNA Sequencing Project Proposed For All Complex Life Forms On Earth By An Int’l Team

Facebook may start production of its own microprocessors

Long-Term Alcohol Monitoring Could Be Possible With A New Injectable Chip Developed By U.S. Researchers

Sweden Now Has The First Electrified Road In The World

World Politics

World & Politics

The British government is trying to unblock money to pay off the national debt

Ministerial Visit From India To North Korea Aimed At Strengthening Ties

What countries are the biggest losers of Trump’s Iran decision?

World's Oldest Elected Prime Minister Is Malaysia’s 92 Year Old Mahathir Mohamad

Why Is U.S. Pulling Out Of The Iran Deal A Big Deal For The World

Merkel, Macron, May call on Iran to adhere to the nuclear deal

Arab Region Driven In ‘Wrong Direction’ In Last 10 Years, Say Arab Your: Survey

German doctors demand a tax on sugar